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What is a Promoter?

A promoter refers to a person or a company that finances a project or investment activity. Promoters support the cause of an activity, task or project and volunteer to help in raising money for the execution of the activity. In an investment activity, a promoter assumes the financial responsibility and help in raising money needed for the investment. A promoter can be an individual, company or organization. In exchange for raising funds for an investment activity, promoters receive a percentage of the funds raised or part of the stock of the company for which the fund was raised, this percentage or stock is given as compensation.

What Does a Promoter Do?

In relation to investment activities, a promoter has the responsibility of raising money for the investment. Aside from raising money, the promoter can also offer investment vehicles to the company. The aim of the promoters is to raise capital or funds for the project at hand, this requires coming up with information that convince investors or contributors to give financial support. In a bid to raise funds, investment promoters attract investors to the uniqueness of their investment, these investors can be domestic investors or foreign investors.

Types of Promoters

There are different types of promoters, the most popular types include the following;

• Casual Promoters: These are promoters birthed out of support for the brand or business, they patronize. For instance, the customers of a business that has good experience with the company can become casual promoters of the ompna, even without the knowledge of the company. They tell friends and family about the company, thereby, increasing the company's sales and revenue.
• Penny Stock Promoters: These types of promoters are used by companies that trade their stock for less than $5 per share. In the penny stock market, penny stock promoters support the cause of the companies and seek to help them increase their revenue. Also, penny stock promoters can bring about an increase in the price per share of these companies through the information they give to investors.
• Government-Based Trade Promoter: These promoters can be government agencies and bodies that help companies with international trade or help them trade in the foreign market. A good example is the International Trade Administration (ITA) in the United States.

Here are some vital points about a promoter;

• A promoter assumes the responsibility of raising money for an investment activity or increasing the revenue of a company.
• A promoter can either be an individual or an organization.
• There are different types of promoters, the common ones are casual promoters, penny stock promoters and government-based promoters.
• Companies also use promoters for correctional effect, especially if the image of the company has been shattered or there is a misconception about the company.
• Promoters present good information about a company to investors, clients or customers.

Criticism of Promoters

There are certain criticisms against promoters, the key ones include the following;

• A promoter can portray a company with not-so-good image as being good, causing investors or customers to make bad investment choices. Giving a false impression of a company is one of the strongest criticisms against promoters.
• Promoters are often overzealous to the extent that they portray a contrary as being successful over others, even when this is false.
• In the stock market, not every promotion activity is legal given that on many occasions, some promotion activities have been linked to investment scams and frauds.
• Promoters are often deceitful and provide skewed information to investors, thereby misinforming them.

Related Topics

• Business Entities (Intro)
• Why is studying business entities important?
• Considerations When Forming a Business Entity
• Holistic (Detailed) Overview of Setting Up a Business Entity
• What are Business Entities?
• What is a Closely-held vs Publicly-held Business?
• What are the main types of business entity?
  
• What are the primary characteristics of business entities?
• What is Creation of a business entity?
• Where to Form a Business
• Incorporating in Delaware
• Forming an LLC in Nevada or Wyoming
• Creating a Company Offshore
• Promoter
• Promoter Liability
• De Jure Corporation
• Ultra Vires
• Brassplate Company
• What is Maintenance of a business entity?
• What is Continuity of a business entity?
• Business Continuity Planning
• Buy Sell Agreements
• Shotgun Clause
• Winding Up
• Dissolving a Foreign Qualification
• What is the Ownership structure of a business entity?
• Joint Stock Company
• Parent Company
• Subsidiary Company
• Wholly-Owned Subsidiary
• Operating Subsidiary
  
• Holding Company
  
• State-Owned Enterprise
• Mutual Company
• Conglomerate
• What is Control of a business entity?
• What is Personal liability of owners of a business entity?
• Entity Theory
• Piercing the Corporate Veil
• What is Compensation of business owners?
• What is Taxation of a business entity?
• What is Sales & Use tax?
• What are payroll and self-employment taxes?
• What are the major characteristics of a Sole proprietorship?
• Uniform Partnership Act
• Uniform Limited Partnership Act
• Partnership Agreement
• At-Will Partnerships
• Responsibilities of Partners to the Partnership
• Silent Partner
• Funding the Partnership
• How are Partners Compensated
• Splitting Equity in an Industrial Partnership
• Terminating the Partnership
• Types of Partnerships
• What are the main characteristics of a General partnership?
• Tort Liability of General Partner
• What are the main characteristics of a Joint venture?
• What are the main characteristics of a Limited partnership?
• Family Limited Partnership
• Master Limited Partnership
• What are the main characteristics of a Limited liability partnership?
• What are the main characteristics of a Limited liability company?
• Forming an LLC
• Articles of Organization
• Operating Agreement or LLC Agreement
• Why You Need an LLC Agreement
• LLC Compensation of Members
• LLC Taxation
• Converting to an LLC
• What are the main characteristics of a Corporation
• Articles of Incorporation 
• What to include in the Articles of Incorporation
• Corporate Bylaws
• Exiting the Corporation
• Dissenter's Rights
• What are the requirements to be an S Corporation?
• Non-Profit Organization
• NonProfit Business Entities
• Private Foundation
• A Detailed Explanation of the Sole Proprietorship
• Taxation of Sole Proprietorship
• A Detailed Explanation of the General Partnership
• 50/50 Partnerships: Never a Good Idea
• Publicly-Traded Partnerships
• A Detailed Explanation of the Limited Liability Company
• A Detailed Explanation of the Corporation
• Keepwell Agreement (Letter of Comfort)
• Personal Service Corporation Definition
• A Detailed Explanation of the Non-Profit Entity
• Public Limited Company (UK)